Getting Started With Mvelopes

Welcome to Mvelopes! I can’t tell you how excited we are to help with your personal finances. At Mvelopes, we try to provide everything you need to get you from where you are to where you want to be financially.

The best way we’ve found to do that is through the envelope budgeting method. Mvelopes helps turn the cash-based method into a completely digital experience, then we add financial education and the hands-on guidance of our personal finance trainers. However you do money, Mvelopes can make it work.

We think that envelope budgeting is the very best way to think about your money, and as part of the Mvelopes app, this way of thinking helps you keep up-to-date on your finances, either on the web or your mobile device. To really get the most out of Mvelopes, you thankfully don't need to carry cash around in paper envelopes, but you do need to get accustomed to just how an envelope budget works.

This video is a quick primer on envelope budgeting inside of Mvelopes, in case it's new to you. If not, we like to start everyone off in Mvelopes doing three things, and those would be the next 3 lessons in this course; so dig in!

In order to make any kind of intelligent progress in managing money and making financial decisions, you need to get the big-picture view of what’s happening with your money right now. Connecting all of your financial accounts to Mvelopes provides you access to your entire financial picture. Adding your accounts to Mvelopes shows your transactions, balances, and other information from all your accounts in a single location, whenever you need to look at them.

This is one of the simplest steps when you’re beginning to use Mvelopes--as simple as logging into your own bank’s website, and just as secure! We take your privacy and security really REALLY seriously; so if you want to know more about that, check out our security page.

It’s important to note that you can’t actually move money around using the Mvelopes app--it’s a read-only connection that’s just designed to help you make better decisions; so when we say “picture” of what’s happening with your money, that’s literally what we mean--your real money is still right where you left it.

Now that you have your accounts connected to Mvelopes, it’s time to start thinking about that whole “envelope budgeting” thing. Imagine that you’ve just gone to the bank and taken out all your money from all your accounts in cash, and now you’re sitting at home with a pile of cash in front of you and a bunch of empty white envelopes… If you were going to start an envelope budget, you’d need to start labeling those envelopes and stuffing cash into them; so that’s what you should do next in Mvelopes!

This isn’t long-term-planning. It’s simply taking the money currently available to you and deciding before you spend it where it needs to go. This discipline helps protect you from overspending while you start thinking more long term about your financial future.

In your Inbox, you’ll notice that the Income Cash Pool has all the money from the accounts you just added. We want to distribute that unallocated money through a process called “Funding.” Funding allows you to plan your finances down to the last penny, so that you know exactly where your money should be going. So take the money from your Income Cash Pool and put it into all the envelopes you’ll need to spend from before you get paid again.

Here’s the way to prioritize your funding:

Account-Specific Money: If money is already in a savings account, fund an envelope to correspond to the purpose you’ve given those dollars. If the purpose was savings for emergencies, then allocate that money into your “emergency fund” envelope, because the reality is that those dollars aren’t immediately available for spending at Target; so you don’t want them to end up in your groceries or home supplies envelopes.

Bills: If you have bills that have to be paid before your next paycheck, set aside money for those so that you don’t accidentally spend it on other things. If there are really big bills due in a couple of weeks, you may want to set some money aside now for those so that you don’t have to take as much out of your next check to cover them.

Living Expenses: Some things happen every month that aren’t technically bills, but still kind of do have to happen like Groceries and Fuel for the Cars; so make sure you plan some for those. Ask yourself: “About how much do I need for that before my next paycheck?”

Extras: These things don’t have to happen, but let’s be honest, they will--eating out, entertainment, snacks for the kids’ soccer team, etc. So just make sure you’re allocating money to cover those expenses. If there’s not enough money to cover these by this time in the funding process, it’s time to make a choice: is there somewhere else you can take that money from or should you wait to do the extra thing until you have more money?

When funding, make sure you give every dollar a purpose--fund every last penny into an envelope. If you don’t give the money a purpose, chances are it’ll get spent on purposeless things.

Once you’ve done your initial funding, you essentially have your first budget. (Good work, by the way!) Now it’s time to start creating a habit of paying attention to what you’re doing in light of your plan. Set a reminder, make yourself a note--whatever you have to do to start checking your budget each day. It likely won’t take more than a minute and a half, but the practice will create invaluable, up-to-date insights for day-to-day decision making.

Each morning, once your bank posts new transactions to your accounts, Mvelopes will pull those into your Inbox, and then you’ll assign those transactions to the envelopes that correspond to what you spent the money on. If you forgot to plan for something, just make a new envelope, but don’t forget to transfer money to that new envelope to cover the expense so that you keep on moving forward without spending more than you can afford.

Each time you assign a transaction, you’ll see the balance of the envelope decrease, letting you know what’s left over to cover other expenses. The point of this exercise is to keep you in the loop about what you can afford each day so that you can make wise choices with your money.

Think back to our analogy of cash and paper envelopes. Assigning transactions is like taking the cash out of the Water Bill envelope to pay the utilities company--once it’s gone, well… it’s gone.

If you use credit cards for spending on day-to-day purchases, that’s totally ok! Click here to learn more about how Mvelopes helps you use credit cards without creating more debt!

Let’s think back to our cash and paper envelopes analogy again…

We’ve stuffed our cash into envelopes by Funding. We’ve spent money out of our envelopes by Assigning Transactions. Now we need to start thinking ahead so we know what to do with money the next time it comes in. If it were a paper envelope budget, we might write the amounts of our bills on the backs of the envelopes or maybe we’d list them all out on notebook paper.

Planning ahead helps us make sure we account for things like holidays and vacations that don’t happen every month, and it also creates space for us to consider our personal goals and start working out a plan for achieving them.

Just like when we were Funding, we want to give every dollar a purpose in our long-term plan, too (since it’s basically just a template for future Funding). So, we start with Income--how much do you expect to make each month?--and then we break down the Income based on what needs to happen with the money.

If your income is highly variable, then figuring this part out can seem more daunting, but you can start with a low estimate on your income and always make adjustments later.

Once you have all your different Income sources added, start making a plan for what needs to happen with those dollars in your Budget. We always suggest saving and giving first, as an all-around good idea, and if that freaks you out or you’re not already on board with the time-proven 10-10-80 budget lifestyle, then allow us to persuade you… click here to read more.

Just like your Funding, once you cover your donations and saving, you want to make sure to plan for your monthly bills first and then your monthly essentials. Next, plan for periodic bills like insurance and taxes, and divide the total by the number of months you have left to save up enough for those expenses. The goal is to take as little as possible from your monthly budget, but to still have enough saved when the bill is due.

After periodic bills, think about the monthly extras like entertainment, eating out, and any other “extras” you like to do. Finally, think about the periodic extras like holiday shopping and vacations and set aside some money each month to save up enough to cover those before the get here.

Two likely outcomes at this point: you either have extra money you need to make a plan for or you’ve already planned for more than you’ll actually earn. The first situation is easy! Figure out what your most important and urgent financial goal is (build emergency savings, pay off debt, save for purchasing a house…) and put the extra toward that. If you don’t have enough to do everything you’ve planned, you may want to talk to one of our Personal Finance Trainers and get some ideas for changes you could make to turn that ship around!

Last thing to note about setting up your long-term plan: you’ll notice that there’s another tab above your Budget called Funding Plan. That’s a cool feature! It takes your monthly plan and lets you break it down paycheck-by-paycheck so that when the money comes in, you can just Fund your envelopes with a single click!